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MNI SNB Preview - March 2024: Dovish Tilt on the Cards

SNB

Executive Summary:

  • SNB decision could go either way, with markets split between a hold at 1.75% and a 25bps cut
  • Inflation has slipped closer to the middle of the SNB target range, clearly undershooting inflation forecasts
  • CHF has depreciated in nominal and real terms during first months of 2024 as SNB switch to a neutral FX approach

Full preview including summary of sell-side views here:

https://roar-assets-auto.rbl.ms/files/60395/SNBPreview-2024-03.pdf


Market pricing and consensus views for the SNB’s March decision are on a knife-edge between a 25bps cut or a hold at 1.75%. The decision will depend on the SNB’s longer-term assessment of inflation against deflation risks, as headline CPI has printed close to the middle of the SNB’s target range in recent months. A hold would likely be accompanied with a clearly dovish tilt in communication. Markets currently price 8-9bps of easing for the meeting, corresponding to about a 2/3 implied probability of a hold, while a 25bps cut to the deposit rate would likely be accompanied with cautious language on policy ahead.

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